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on Law and Economics |
| By: | Horn, Henrik; Maggi, Giovanni; Staiger, Robert |
| Abstract: | We propose a model of trade agreements in which contracting is costly, and as a consequence the optimal agreement may be incomplete. In spite of its simplicity, the model yields rich predictions on the structure of the optimal trade agreement and how this depends on the fundamentals of the contracting environment. We argue that taking contracting costs explicitly into account can help explain a number of key features of real trade agreements. |
| Keywords: | endogenously incomplete contracts; GATT; trade agreement; WTO |
| JEL: | D86 F13 K33 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6037&r=law |
| By: | Bertocchi, Graziella; Strozzi, Chiara |
| Abstract: | We study the determinants of 19th century mass migration with special attention to the role of institutional factors beside standard economic fundamentals. We find that economic forces associated with income and demographic differentials had a major role in the determination of this historical event, but that the quality of institutions also mattered. We evaluate separately the impact of political institutions linked to democracy and suffrage and of those institutions more specifically targeted at attracting migrants, i.e., citizenship acquisition, land distribution, and public education policies. We find that both sets of institutions contributed to this event, even after controlling for their potential endogeneity through a set of instruments exploiting colonial history and the quality of institutions inherited from the past. |
| Keywords: | 19th century international migration; colonial history; democracy; institutions; migration policy |
| JEL: | F22 F54 K40 N33 O15 P16 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6050&r=law |
| By: | Bertocchi, Graziella; Strozzi, Chiara |
| Abstract: | We investigate the origin and evolution of the legal institution of citizenship from a political economy perspective. We compile a new data set on citizenship laws across countries of the world which documents how these institutions have evolved in the postwar period. We show that, despite a persistent impact of the original legislation, they have responded endogenously and systematically to a number of economic determinants, such as migration, the size of government, and the demographic structure of the population. Overall, a large stock of migrants decreases the probability of adoption of a mix of jus soli and jus sanguinis provisions, while it pushes jus sanguinis countries toward the adoption of jus soli elements. The welfare burden proves not to be an obstacle for a jus soli legislation, while demographic stagnation encourages the adoption of mixed and jus soli regimes. We also gauge the potential role of legal, political and cultural determinants, and find that a jus sanguinis origin is a factor of resistance to change, that a high degree of democracy promotes the adoption of jus soli elements while the instability of state borders associated with decolonization impedes it, and that cultural factors have no impact. |
| Keywords: | borders; citizenship laws; democracy; international migration; legal origins |
| JEL: | F22 K40 O15 P16 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6066&r=law |
| By: | Giuseppe Dari-Mattiacci; Eric Langlais; Bruno Lovat; Francesco Parisi |
| Abstract: | TThis paper presents a general rent-seeking model in which participants decide on entry before choosing their levels of efforts. The conventional wisdom in the rent-seeking literature suggests that the rent dissipation increases with the number of potential participants and with their pro- ductivity of effort. In this paper, we show that this result of the rent- seeking literature is far from general and applies only when participants are relatively weak and enter the game with certainty. In the presence of strong competitors, the expected total dissipation actually decreases, since participation in the game is less frequent. We further consider the impact of competitors' exit option, distinguishing between "redistributive rent-seeking"and "productive rent-seeking" situations. In redistributive rent-seeking, no social loss results from the fact that all competitors exit the race. In productive rent-seeking, instead, lack of participation creates a social loss (the "lost treasure" effect), since valuable rents are left unex- ploited. We show that the lost-treasure effect perfectly counterbalances the reduction in rent dissipation due to competitors' exit. Hence, unlike redistributive rent-seeking, in productive rent-seeking the total social loss remains equal to the entire rent even when parties grow stronger or the number of players increases. |
| Keywords: | Rent-seeking, rent dissipation, Tullock' s paradox. |
| JEL: | C72 D72 K00 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2007-02&r=law |
| By: | Langlais, Eric |
| Abstract: | The purpose of this paper is to investigate the optimal enforcement of the penal code when criminals invest in a specific class of avoidance activities termed dissembling activities (i.e. self-protection efforts undertaken by criminals to hedge their illegal gains in case of detection and arrestation). We show that the penal law has two screening effects: it separates the population of potential criminals between those who commit the crime and those who do not, and in the former group, between those who undertake dissembling efforts and those who do not. Then, we show that it is never optimal to use less than the maximal fine in contrast to what may occur with avoidance detection (i.e. efforts undertaken in order to reduce the probability of arrestation: Malik (1990)); and furthermore, that the optimal penal code may imply overdeterrence. Finally, we show that any reform of the penal code has ambiguous effects when criminals undertake dissembling activities which are a by-product of illegal activities, since increasing the maximum possible fine may increase or decrease the number of crimes committed and may increase or decrease the proportion of illegal gains hedged by criminals. |
| Keywords: | deterrence; avoidance detection; dissembling activities; optimal enforcement of law. |
| JEL: | D62 K42 H57 K40 D60 |
| Date: | 2007–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1575&r=law |
| By: | Daniel Albalate (Faculty of Economics, University of Barcelona.) |
| Abstract: | Road safety has become an increasing concern in developed countries due to the significant amount of mortal victims and the economic losses derived. Only in 2005 these losses rose to 200.000 million euros, a significant amount – approximately the 2% of its GDP- that easily justifies any public intervention. One tool used by governments to face this challenge is the enactment of stricter policies and regulations. Since drunk driving is one of the most important concerns of public authorities on this field, several European countries decided to lower their illegal Blood Alcohol Content levels to 0.5 mg/ml during the last decade. This study evaluates for the first time the effectiveness of this transition using European panel-based data (CARE) for the period 1991-2003 using the Differences-in-Differences method in a fixed effects estimation that allows for any pattern of correlation (Cluster-Robust). My results show the existence of positive impacts on certain groups of road users and for the whole population when the policy is accompanied by some enforcement interventions. Moreover, a time lag of more than two years is found in that effectiveness. Finally, I also assert the importance of controlling for serial correlation in the evaluation of this kind of policies. |
| Keywords: | Road Safety, Policy Evaluation, Differences-in-Differences, Drunk Driving, Illegal Blood Alcohol Content Levels (BAC). |
| JEL: | I18 H73 K32 R41 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:200603&r=law |
| By: | Paolo Buonanno (Department of Economics, University of Bergamo); Daniel Montolio (Department of Economics, Universitat de Barcelona); Paolo Vanin (Department of Economics, University of Padua) |
| Abstract: | We investigate the effects of civic norms and associational networks on crime rates. Through their impact on trust and economic development, civic norms may raise the expected returns to crime, but they may also increase its opportunity cost and the feelings of guilt and shame attached to it. Associational networks may increase returns to non-criminal activities and raise detection probabilities, but they may also provide communication channels for criminals. The empirical assessment of these effects poses serious problems of endogeneity, omitted variables and measurement error. Italy’s great variance in social and economic characteristics, its homogeneity in policies and institutions, and the availability of historical data on social capital in its regions allow us to minimise the first two problems. To tackle the third one, we exploit high and stable report rates for some forms of property crime. Once we address these problems, we find that both civic norms and associational networks have a negative and significant impact on property crimes across Italian provinces. |
| Keywords: | Civic norms, Associational networks, Property crime, Italy |
| JEL: | A14 K42 Z13 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:brg:wpaper:0605&r=law |